Tak Lee Machinery Holdings Limited's (HKG:2102) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Tak Lee Machinery Holdings to hold its Annual General Meeting on 28th of November
• CEO Luen Fat Chow's total compensation includes salary of HK$2.64m
• Total compensation is 65% above industry average
• Tak Lee Machinery Holdings' EPS declined by 48% over the past three years while total shareholder loss over the past three years was 14%

Shareholders will probably not be too impressed with the underwhelming results at Tak Lee Machinery Holdings Limited (HKG:2102) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 28th of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Tak Lee Machinery Holdings

How Does Total Compensation For Luen Fat Chow Compare With Other Companies In The Industry?

According to our data, Tak Lee Machinery Holdings Limited has a market capitalization of HK$142m, and paid its CEO total annual compensation worth HK$3.1m over the year to July 2023. That is, the compensation was roughly the same as last year. In particular, the salary of HK$2.64m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Trade Distributors industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.9m. This suggests that Luen Fat Chow is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$2.6m	HK$2.6m	85%
Other	HK$471k	HK$481k	15%
Total Compensation	HK$3.1m	HK$3.1m	100%

Talking in terms of the industry, salary represented approximately 92% of total compensation out of all the companies we analyzed, while other remuneration made up 8% of the pie. There isn't a significant difference between Tak Lee Machinery Holdings and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Tak Lee Machinery Holdings Limited's Growth Numbers

Tak Lee Machinery Holdings Limited has reduced its earnings per share by 48% a year over the last three years. Its revenue is down 31% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Tak Lee Machinery Holdings Limited Been A Good Investment?

Since shareholders would have lost about 14% over three years, some Tak Lee Machinery Holdings Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 1 which can't be ignored) in Tak Lee Machinery Holdings we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.